Forty-six percent of dealers purchase products from more than one source. Distributors are respondin
Dealers expect more services and support from their distribution channels than they have in the past. In addition to technical support, equipment inventory, and price, dealers look to distributors to provide financial services, marketing support, training and trade shows. And, faced with the decision of which channel to purchase products from, dealers are having to take more services into consideration than ever before.
As a result, 46 percent of dealers are purchasing products from more than one source, according to the 1998 Security Sales Distribution Survey. Not surprisingly, 95 percent of survey respondents do purchase products from a distributor.
The distribution survey was designed to present a picture of where dealers are purchasing products, how purchasing decisions are being made, and how products are being ordered.
Price Helps Determine Who to Buy From
The price war is not just between the big national companies and the independent dealer, but it’s also between companies that sell products to dealers, namely, distributors, manufacturers and manufacturers’ representatives.
When deciding where to purchase products, 37 percent of survey respondents say price is the No. 1 concern, and 26 percent say price is No. 2 on their list.
As competition stiffens in the burglar alarm market, distributors are turning to specialized niches to help dealers expand their revenues. It is not uncommon for a large national distributor to offer multiple product lines.
In some cases, not only are distributors competing with each other, but they’re going up against manufacturers who sell direct.
“I use products from four or five major manufacturers, and they all have good products, so price is a major consideration,” says Dennis Riley, president of Alarm Data in Beltsville, Md.
In addition to or in lieu of a distributor, 72 percent deal with a manufacturer directly or utilize a manufacturer’s representative.
Other than price shopping, dealers work with more than one source, because they like to customize their product offerings. Lloyd Morrison II, owner of Pro-Tech Industries in Pasadena, Texas, buys products from three different distributors.
“I like to field test things and pick and choose the products I want to use,” says Morrison. Each distributor offers Morrison products that he can’t get from the other one. Or, if both distributors offer a particular product, he can price shop.
A distributor may also simply not be carrying a particular line yet. “When we see something we want, we’ll buy it from the manufacturer, because it may not be offered by the distributor yet. Or, the distributor may not offer that manufacturer’s products at all,” says Charles McLemore, owner of Burglar Alarm and Security in Lake Charles, La.
However, many manufacturers will not sell directly to dealers unless the company is committed to purchasing a high volume of products.
Distributor’s Role Has Not Diminished
Though dealers are buying some products direct from manufacturers, the role of the distributor has become increasingly important. Dealers rely on distributors for fast service. Dealers also like the fact that when using a distributor, they can stock less equipment.
It’s important for dealers to have a place that stocks products from several different manufacturers. “I use distributors because they have more of everything. They carry the better part of most manufacturers’ equipment rather than me having to go to the manufacturers and buy everything separately,” says McLemore.
Dealers can also maintain less inventory if they know they can get it the same day or overnight. “There are some things I have to keep in stock, like boxes of wire, staple guns, and some control panels, just in case. But there are certain types of equipment that we don’t know we need until someone asks,” says Morrison.
He continues, “I can’t stock everything. Customers need to be pampered. One customer wants a camera that does one thing and another customer wants something completely different.”
McLemore says that good technical support is critical. “If I’m on location and I need technical assistance, I’m in an awkward situation if the distributor doesn’t get back to me,” he says. “I’ve been in the boondocks installing a system, and I couldn’t get hold of a technician. They called back in a couple hours.”
The data reveals that dealers who consistently get good service from a distributor are likely to continue that relationship. After all, if the dealer loses a customer, the distributor’s sales drop too.
Where Are Products Purchased?
Manufacturer Direct 46%
Manufacturers’ Rep. 26%
Percentage of Dealers
Source: 1998 Security Sales Distribution Mini-Survey
Forty-six percent of respondents purchase products from more than one of the above sources.
How Are Purchasing Decisions Made?
Technical Support 87%
Long Relationship 83%
Timely Delivery 83%
Financial Services 54%
Marketing Services 48%
Surprisingly, dealers’ expectations of what distributors should provide has evolved to include marketing and financial services.
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